Fiverr (NYSE:FVRR) stock is again breaking out and investors should ride the latest move higher to some quick gains.
The online marketplace for freelance services had a stellar run in 2020 during the global pandemic. With freelance work in greater demand than ever before, FVRR stock enjoyed a spectacular 741% gain last year.
Between the first and last trading days of 2020, Fiverr’s share price rose to $195.10 from $23.19. The stock peaked at an all-time high of $336 a share in mid-February of this year. Since then, it has pulled back hard, leading many investors and analysts to question the stock’s long-term prospects.
However, in the last month, FVRR stock rallied 24% and is now back at $200 a share. The breakout generated excitement and hope that the shares can again go on a monster run and retest their all-time high.
Even if $336 is unattainable, there’s reason to believe that the stock will continue to move higher in coming weeks.
Rapid Growth and Profitability
The pandemic raising demand for freelance services is not the only reason for the meteoric rise in FVRR stock. The company, which is based in Tel Aviv, Israel, continues to experience explosive growth. By streamlining and simplifying the hiring process, Fiverr has managed to rapidly expand the number of freelance workers listed on its site and the organizations and individuals looking to hire them.
The company’s revenue reached $75 million in this year’s second quarter, up 300% from the same quarter of 2019, before the pandemic.
Fiverr says it now has 4 million active buyers on its platform and that the average spending per buyer has grown from $145 in 2018 to $226 today. The company reached a milestone earlier this year when it turned profitable for the first time, reporting a net profit of $7.4 million in the second quarter.
For all of this year, Fiverr said it expects revenue of between $280 million and $288 million. The midpoint of that range would amount to 50% growth compared to 2020.
Trending Tailwinds
Perhaps most exciting, Fiverr estimates its addressable market to be worth $115 billion in the U.S., which is its largest market. Globally, Fiverr’s market could be worth $200 billion or more. The ongoing growth of e-commerce, continued popularity of remote work, and proliferation of gig economy jobs are the trends giving Fiverr strong tailwinds and propelling its business to new heights. To help generate even more revenue, the company has begun introducing a number of paid subscription services.
New subscription services include a feature that enables buyers of services to enter into long-term working arrangements with freelancers, booking repeat work and saving time and possibly getting a discount. Fiverr also continues to aggressively expand into new markets around the world and now offers its services in several languages other than English. And the company continues to invest heavily in improving its product. Fiverr says it spent 30% of its gross profits on research and development over the last 12 months.
Get On the FVRR Stock Train
Investors looking for gains in a fractious and uneven market should get onboard the FVRR stock train and ride it to profits. After pulling back sharply over the past six months, Fiverr shares are again rallying and although they’ve risen more than 20% in the past month. There is every reason to believe, based on the company’s strong performance and financial results, that they can run higher. Fiverr is a fast-moving growth stock that is profitable and has plenty of runway ahead of it.
The median price target on Fiverr ‘s share price is $225, suggesting a further 12% gain from here. The high estimate on the share price is $270. However, those forecasts have not been updated since Fiverr’s current rally began in August.
Given its potential for growth and gains, investors should take advantage of the current run and buy shares before they get more expensive. At its current level of $200 per share, FVRR stock is a buy.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
